Publishing Keynote, JP Eggers

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Transcript of Publishing Keynote, JP Eggers

Conclusions Thus, the key question is about how to deal with radical, competence-destroying changeHow to recognize that your existing competences are being destroyedHow to build new competencesHow to build an organization that allows for a more flexible transition from one set of competences to another A plan for this talk... This offers a plan for the entire talk:What makes dealing with technological change so hard, and what can you do about it?How can you build capabilities for being "proactive", and identify tools for dealing with uncertainty and risk in a more structured way?Conclusions on value creation & capture What makes technological disruption so ... disruptive? Technological change happens all the timeTower Records went from LPs to tapes to CDsKodak went from one film type to anotherDEC was a leader in generations of mainframe and minicomputers What typically gets in the way of adaptation to a new technology? Issues around identity Issues around decision making & incentives Issues around people & skills Typical source of identity issues:New business model conflicts with the old business modelPolaroid's obsession with "razors & blades" model of digital photographyFocused only on projects that capitalized on instant printing knowledge & modelScreened out important new projects in digital space What you need to be aware of:Business models and technologies are often tightly intertwinedStatements like, "That's how we do things around here" can stop push to experimentIdentity should be built on fundamental value added of organization, not on deliverye.g., Don't be a "book company", but be a "content identification, development & distribution" company Most radical new projects entail taking on more risk than traditional projects:Hierarchical structures avoid riskThough also avoid investing in bad projectsOrganizations typically structure incentives to avoid risk, consciously or subconsciouslyOutcome bias (evaluating decision based on outcome, not quality of decision)Capital budgeting process typically focuses on processes for low-risk projects99% of proposals are straightforward and incremental, therefore process optimizes on these How can you be more flexible and proactive in the future? Technological Change: The Good, the Bad, and the Challenging Radical versus Incremental ChangeSome changes build more clearly on existing skills, and incumbent firms typically adapt well to these

Some changes require new skills and new processes to capitalize on them What you need to be aware of:Think about decision-making processes -- when do you need more hierarchy to cut risk of pursuing bad projects, versus when do you need more delegation to avoid missing good projects?Think about the messages sent to employees by promotions & evaluations -- do they systematically discourage risk taking?Think about whether all projects being considered belong in the same approval process -- which projects might need to be considered versus a different set of criteria? Radical new projects typically involve abandoning certain skills and integrating new ones:Not just patching new skills/functions into existing structure, but rebuilding structure around new coree.g., Just adding a "digital distribution" arm to an existing structure may:Signal that this new activity isn't in the core of the businessPlace political barriers between old and new employeesPerpetuate mentality of old (flawed) business modelConsider the new strategy entirely and see if there needs to be a new structure to matchNew skills are needed, so what can be taught versus what requires new employeesRe-educating allows you to (a) maintain trust and (b) retain other important skills, but it is costly and time-consumingCorrect tradeoff might depend on pace of needed change and importance of complementary skillsHiring people with new skills is challengingIndividuals are generally attracted to people like themselves (homophily), which makes hiring new types of people difficultSkills can also be acquired through M&A, alliances, etc. Sizable layoffs present specific challenges, primarily because layoffs decrease morale, which makes:Retaining employees more difficult (and those that stay are the ones that you need)Hiring new people more difficult (especially important when needing new skills)Motivating people more difficult (and motivation is a big driver of creativity and willingness to "go beyond" job description) What you need to be aware of:Identify a clear and coherent strategy, build a cohesive senior team, and stabilize key peopleEstablish and preserve key lines of communication, especially about vision/strategy and rationaleInvest in key personnel, both to build new skills and to re-establish trust Typical practice for evaluating projects is to:Predict what the we think will happenCalculate an expected return based on prediction

But there are fundamental flaws with this approach:The "average" doesn't occur oftenWe ignore the cost of doing nothing"Expected" is complicated Be more analytical about uncertainty Build for flexibility Average...and the least likely outcome Flexibility requires:Sensing &Seizing Sensing is about getting new information into the firm and recognizing its valueAccept dissent and build a culture of open thinkersWelcome different perspectivesPreserve variety in thoughtRecognize that exploration is different from exploitationEfficiency-focus often limits explorationStructural separationBe willing to make investments to explore unlikely but potentially attractive options Seizing is about flexibility and responsivenessBuild flexibility into organizational designModular, team-based structuresRegular retasking & restructuringDelegate authority and increase discretionAutonomy increases local responsivenessHierarchy slows decisionsUse within limits, though How can your organization create value? Consumers still want books and have a willingness to pay for themBut the publishing business is no longer about printing or relationships with book sellersEmbrace the new skills and the potential of the new medium How can your organization capture value? Focus on the uniqueness that your organization providesContentInteractivityData & consumer relationshipCreate more value -- for your segment(s) -- than other organizations How can your organization plan for the future? Reimagine your business and be willing to build around that new visionCreate your organization and its processes for flexibility and uncertainty J.P. EggersAssistant Professor of Management & OrganizationsNYU Stern School of Businessjeggers@stern.nyu.edu Technological Change:The Good, the Bad &the Challenging Balanced needs of traditional and Internet channelsFavored Internet as growth area, but did not compromise on needs of existing distributionBuild out exceptionally interactive and engaging channelsReorganized the business around ownership of fan interaction with baseball contentAggressively built new skills